Booming China Is Buying Up World's Coal

By ELISABETH ROSENTHAL

Published: November 22, 2010

CORRECTION APPENDED

Even as developed countries close or limit the construction of coal-fired power plants out of concern over pollution and climate-warming emissions, coal has found a rapidly expanding market elsewhere: Asia, particularly China.

At ports in Canada, Australia, Indonesia, Colombia and South Africa, ships are lining up to load coal for furnaces in China, which has evolved virtually overnight from a coal exporter to one of the world's leading purchasers.

The United States now ships coal to China via Canada, but coal companies are scouting for new loading ports in Washington State. New mines are being planned for the Rockies and the Pacific Northwest. Indeed, some of the world's more environmentally progressive regions are nascent epicenters of the new coal export trade, creating political tensions between business and environmental goals.

Traditionally, coal is burned near where it is mined -- particularly so-called thermal or steaming coal, used for heat and electricity. But in the last few years, long-distance international coal exports have been surging because of China's galloping economy, which now burns half of the six billion tons of coal used globally each year.

As a result, not only are the pollutants that developed countries have tried to reduce finding their way into the atmosphere anyway, but ships chugging halfway around the globe are spewing still more.

And the rush to feed this new Asian market has helped double the price of coal over the past five years, leading to a renaissance of mining and exploration in many parts of the world.

''This is a worst-case scenario,'' said David Graham-Caso, spokesman for the Sierra Club, which estimates that its ''Beyond Coal'' campaign has helped to block 139 proposed coal plants in the United States over the last few years. ''We don't want this coal burned here, but we don't want it burned at all. This is undermining everything we've accomplished.''

In Australia, environmental groups have repeatedly halted trainloads of coal headed to the export docks at Newcastle this fall, and flotillas of kayaking protesters have delayed cargo pickups by Asia-bound coal ships.

Julia Gillard, Australia's newly elected prime minister, promised during her campaign to ''put a price on carbon'' -- in other words, make companies pay in some way for excessive carbon dioxide emissions. But environmentalists say that such laws will be meaningless if the country continues its nascent coal rush and ''exports global warming to the world,'' as one group, Rising Tide Australia, puts it.

This summer an Australian company signed a $60 billion contract with a state enterprise, China Power International Development, to supply coal to Chinese power stations beginning in 2013 from a vast complex of mines, called China First, to be built in the Australian outback. It was Australia's largest export contract ever, the company said.

The deal points to the love-hate relationship many wealthier countries have with coal: while environmental laws have made it progressively harder to build new coal-fired power plants, they do not restrict coal mining to the same extent.

That is partly because emissions accounting standards focus on where a fuel is burned, not where it is dug up; because the coal trade is a lucrative business; and because the labor-intensive mining industry creates jobs.

Such benefits are particularly hard to forgo in the midst of a recession. In the last two years, ''There has been an awful lot of mining development, and much of it is based on the potential of these new markets,'' said David Price, director of the global steam coal advisory service at IHS-Cera, a global energy consultancy.

Vic Svec, senior vice president of Peabody Energy, the world's largest private coal company, said it was ''planning to send larger and larger amounts of coal'' to China.

''Coal is the fastest-growing fuel in the world and will continue to be largely driven by the enormous appetite for energy in Asia,'' he said.

The conflict between environmental and trade concerns is gaining momentum in the United States and Canada as well as Australia.

Last year, the United States exported only 2,714 tons of coal to China, according to the United States Energy Information Administration. Yet that figure soared to 2.9 million tons in the first six months of this year alone -- huge growth, though still a minuscule fraction of China's coal imports.

New mines are planned to expand the market further. Earthjustice, a nonprofit environmental law firm, is suing to block the lease of state-owned land in Otter Creek, Mont., to Arch Coal for mining to serve demand in Asia and elsewhere. Likewise, Peabody Energy and Australia's Ambre Energy have been separately expanding mines and exploring the idea of opening loading ports in the Pacific Northwest.

In Washington State, the Port of Tacoma said Friday that it would not host a proposed coal loading plant, citing ''a multitude of business and community factors.'' This week officials in Cowlitz County are expected to decide whether to grant a permit for a proposed coal port in Longview, on the border with Oregon.

This article has been revised to reflect the following correction: An article on Nov. 22 about a surge in coal imports to China misidentified the entity that recently rejected proposals for adding a coal export terminal in the Tacoma, Wash., area. It was the Port of Tacoma, an independent municipal corporation, not the city of Tacoma. The article also misstated the time frame in which the decision not to add a terminal was made. According to a port spokeswoman, officials decided not to pursue terminal proposals advanced by coal companies over a period of several weeks, ending in early November; she said they did not make the decision on Nov. 19. (That was the date on which the port first informed a publication that the terminal would not be built.)